Should I Outsource Freight Bills?

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 Prior to 1980 the transportation marketplace was very heavily regulated. The National Association of Freight Payment Banks was established to keep track of all the freight bills and to ensure banking requirements were being met by the shippers and the carriers. There were regulated parameters for credit extension in accordance to which the freight bill settlement was based upon.

In 1980, the transportation industry was deregulated, which allowed for the carriers and shippers to negotiate credit payment terms. Even though this deregulation added to the flexibility of firms to negotiate credit payment period, it also required them to follow a vigorous process of pre-auditing before freight payment is conducted. The process generally requires a verification of freight rates, accounts of previous payments, liability checks of shippers and validation of freight payment requirements. 

In order to avoid the hassle of going through this process, many companies outsource freight bills. Outsourcing generally saves the company money in three major areas:

• Reduction in cost of payment to account payables department and
• Cost of processing
• Reduction in accounting errors

There are various companies which offer the outsourcing of freight billing and auditing. By shifting the responsibility and hassle to these firms offering such services, this allows the business to focus on their core competences and not waste time and resources on processes that can be better managed by others at lower costs.

These outsourcing companies can reduce the occurrence of errors which ultimately costs the business considerable outlay. There will be reduction in duplicate entry of bills incorrect freight rates. Moreover, they will provide additional services apart from the basic freight billing like customized information regarding your accounts management. Periodic reports, carrier usage information and extensive professional information on freight related issues will facilitate the business in making informed decisions.

Regardless of the advantages, there are aspects which need to be kept in mind before outsourcing your freight bills. The company who is providing the services should be ISO certified and have proper certification and expertise in the field of accounts payable management. Also the firm should provide good customer service and efficiently resolve issues related to freight payment. 

Please note that the one of the main issues concerning outsourcing freight bills is that to insure a cohesive carrier-shipper relationship. In order to establish this point, companies, before outsourcing, should make sure that the service providers also ensure good carrier relationship management. To conclude, please keep in mind the possible issues that can be encountered along with the positive aspects of outsourcing freight bills. After weighing the pluses and minuses, it is clear that the smart decision is to outsource the service and focus time and resources on the core competencies of the company.

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